Lecture Notes on Equilibrium in Continuations

Introduction

• The video discusses the use of equilibrium in continuations.
• Contrast with ICT's approach to discount and premium.

Understanding Fibonacci Settings

• Use a simple Fibonacci with settings:
  • 0.5 and 1 marked out.
  • Generally remove 0 and 1, focusing on 0.5.
• Measure candles from Wick High to Wick Low, not using candle bodies.

Phases of Price

• Important to understand how price behaves in different phases.
• Expansion Phase:
  • Price rarely retraces to discount/premium.
  • Example: Price expands higher after a retracement, only then reaching down into a discount.
• Anticipation with Equilibrium:
  • In expansions, look for upper half to respect for higher trades, and lower half for lower trades.
  • If these do not respect, flip bias and anticipate the low of the range being taken.

Example Analysis

• Previous Day Marking:
  • Analyze expansion and use upper half of the range to support higher trades.
  • Example: Reaction in the fair value gap leads to a continuation higher.
• Higher Timeframe Consideration:
  • Higher timeframe candles respecting the upper half of the previous candle's range can indicate a trade higher.

Trading View Examples

Example 1

1. Context:
   • Equal lows ran out, high above.
   • Closure indicates potential to trade higher.
2. Hourly Analysis:
   • Look for PD arrays in upper half of the range.
   • Fair value gap and protected low identified as key levels.
3. New York Session:
   • Price moves into fair value gap; if respected, bullish continuation expected.

Example 2

1. Daily Chart Overview:
   • Low taken out, closed inside the range.
   • Bullish or bearish scenarios based on EQ respect.
2. Intraday Action:
   • Consolidation leads to expectation of low's movement, trading higher if EQ respected.

Additional Examples

• Review daily closures paired with EQ.
• Watch for consolidation, expansion, and how price reacts to previous highs and lows.
• Patterns of respecting or failing the EQ indicate potential trade directions.
• Fractal concept: Can be applied on various time frames for bias and structure analysis.

Conclusion

• Importance of using the concepts of equilibrium and price phase understanding in trading.
• Anticipating trades based on daily closures and PD arrays.
• Fractal nature allows application on different time frames for more robust trading strategy.